Nine Suggested Money Moves For 2011

Consumers urged to maximize their cash in the new year

Mark Huffman has been a consumer news reporter for ConsumerAffairs since 2004. He covers real estate, gas prices and the economy and has reported extensively on negative-option sales. He was previously an Associated Press reporter and editor in Washington, D.C., a correspondent for Westwoood One Radio Networks and Marketwatch.
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The
Federal Reserve reports American businesses continue to sit on huge cash
deposits and the amount appears to be growing.

In its
latest report, the Fed said nonfinancial companies in the U.S. were holding
$1.93 trillion in cash and other liquid assets at the end of September. That's
up from $1.8 trillion at the end of June.

What
about consumers? Since the economic meltdown of October 2008 Americans' saving
rate has been on the rise. What should consumers be doing with their finances to
maximize their financial stability in the year ahead?

"Building
up a cash cushion and paying down debt are smart money moves no matter what
your financial position," said Ethan Ewing, president of the financial
websiteBills.com. "As more
Americans have successfully adopted this strategy, it's time for them to
demonstrate an even higher degree of financial savvy with some well-timed money
maneuvers in 2011."

Ewing
says there are nine steps consumers should take in 2011 to protect and build
their money.

Revisit your monthly budget

A new year means a new budget. Calculate your monthly income, required monthly
expenses, and then whittle down your discretionary spending. Allow for some
flexibility and a few small luxuries to make it realistic, but be aggressive in
cutting out extras. Be disciplined in your spending and saving - do not let
extra savings one month increase your entertainment spending in the next.

Commit to reducing your debt or
building your nest egg

If you still have credit card debt or a high interest secured loan, use the
savings from your new, aggressive budget to begin paying it down. If you are
debt free or are only paying down a low interest mortgage or auto loan, then be
sure to build a nest egg equal to at least six months spending.

Ratchet up long-terms savings for
retirement and college expenses

If you are fortunate enough to have paid off your debt and stashed away a
sizable nest egg, then it's time to increase your retirement or college
contributions. Be sure to max out retirement savings first because you can find
loans for college if necessary. If your employer offers a 401(k) match, it's
free money - take it.

Open a Health Savings Account (HSA)

If you are considering a high-deductible insurance plan, be sure to open an HSA
to cover out of pocket medical expenses, including co-pays, health-related
purchases, and more. Contributing to an HSA can lower your taxable income and
allows your money to grow tax-deferred through retirement.

Re-bid your insurance provider

Insurance companies have also been hit hard by the recession. This means many
will be even more aggressive to win your business. Comparison shop for cheaper
home or auto insurance alternatives, but be sure to pay attention to
differences in coverage so you remain adequately insured. You may find that
your current provider is not the most affordable, or that they are willing to
drop their rates to retain your business.

Research mortgage refinance rates on
your home

Even if you refinanced your home in 2010, it makes sense to research rates
again. For many homeowners, record low rates means you can save money and
interest over the life of your loan with another home refinance. The Bills.com
mortgage calculator provides an easy way to decide if a refinance makes sense
for you.

Re-evaluate your monthly utilities

You can save hundreds of dollars a year by comparison shopping or reducing
monthly utility bills such as television, Internet, and cell phone. More and
more Americans are cutting the cord of traditional cable or satellite and
finding basic or premium television content online in order to save money.
Similarly, streaming movies offer a cheaper alternative to the Cineplex. Shop
high speed Internet and cell phone providers for better rates, or consider
reducing your Internet speed or cell phone minutes to save on monthly usage.
Basic utilities such as garbage, home security, and recycling can also be bid
out.

Assess healthcare and health insurance
changes

Many health insurance providers are changing their plan limits and fees
in response to national healthcare legislation. Pay attention to mailings from
your provider and ask questions of your employer if you subscribe to a
workplace plan. Carefully weigh changes in premium versus co-pays and
preventative healthcare coverage when evaluating plan options. Review past
medical and prescription needs and usage as a guide to how you will likely use
the plan during 2011.

With your new utility, insurance, and healthcare savings offsetting increases
in retirement and college tuition contributions, rebalance your monthly budget.
Tuck away additional extra income into your HSA or rainy day fund. As you
approach the end of January, check your actual spending amounts against your
expected budget to ensure accuracy.

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